TURNING POINTS IN EARLY CYCLES
THIS BOOK offers an explanation of an economic mechanism which appears to operate in most business cycles to cause the downturns from periods of prosperity, and the upturns from depressions. At present the problems of these turning points constitute the most important, the most puzzling, and the most controversial issues in business cycle theory. If we can gain understanding of the turning points we shall clear the way for more rapid progress toward agreement about the nature and causes of the cycles themselves, and hasten the time when measures can be intelligently designed to avert them, or at least to mitigate their gravity.
In recent years there has developed among students of business cycles a good deal of agreement about the nature and characteristics of the cycles, but not about the causes of their turns. There is general accord among research workers in business economics in holding that the cycles of business activity which carry employment, production, and national income through long swings alternately up to prosperity, and then down to depression, are irregular in size and irregularly spaced. These students all emphasize the gravity of recurring periods of economic depression, and realize that there is developing a world-wide consciousness of the serious nature of their social and economic effects.
All are agreed that business cycles are never repeated. Each new cycle is an economic and historical individual. There is general acceptance of the convincing nature of the evidence showing that the cyclical fluctuations of employment and production in connection with the output of durable goods are much wider than are those related to the making of nondurable goods. There is growing agreement about terminology, and most students now discuss four phases